Mar 13, 2023 2 mins read

Reasons Why Crypto Market Has Plummeted

The world of digital assets is uncertain – the cryptocurrency market is volatile and hitting a new low daily. It had slid down to $870 billion a few months back. FTX, one of the major cryptocurrency exchanges seeing massive growth, failed in November 2022. This development caused cryptocurrency prices to become volatile. Eventually, on December 3, 2022, the price of Bitcoin (BTC) reached a new annual low of $16,736.

Cryptocurrency investors had a rough last year, with the value of Bitcoin and other virtual currencies sinking drastically. This sudden fall has affected several cryptocurrency investors. If you, too, have been hit hard by the crypto storm, it’s time to learn the reasons behind its downfall.

Let’s discuss in detail the reasons why the crypto market has plummeted.

1. COVID-19 Uncertainty

Ever since the Covid-19 pandemic’s new variant named the Omicron, investors have been hesitant to invest in cryptocurrency due to the wide spread of the virus.

2. Russia & Ukraine War

When Russia announced the war against Ukraine, the cryptocurrency market crashed drastically. It resulted in the investor community selling them off for fear of further price reduction.

3. Hike in Interest Rates

When the US Federal Reserve announced a hike in interest rates that further led to a downfall in the market, participants were now even more pressurized.

4. The Fall of Terra

After the collapse of the algorithm stablecoin, Terra shrunk, failing its peg with the US dollar. Similarly, the price of LUNA fell, and most crypto holders lost their money. It was the beginning of the downfall of cryptocurrency.

5. Downhill Equity Market

The crypto market has a high correlation with the equity markets. So, the crypto market goes down when the stock market is down. Until mid-2022, crypto prices rose and fell in line with equity prices. However, with a constant drip in tech stocks, the crypto market declined globally as Bitcoin, Ethereum and Dogecoin were heavily affected.

6. Inflation

Since US inflation reached a 40-year high, Bitcoin has reached its 18-month low. Besides the collapse of the Terra/Luna ecosystem, many companies have faced troublesome events.

Precious metals are the perfect alternative investments that can help investors bounce back. With both the crypto market and stock market highly volatile, investors are looking to protect their net worth by exchanging them with precious metals such as gold, silver, platinum, and palladium

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Our team of experts helps clients open their precious metals IRA and improve their retirement savings. We can also help with precious metal storage options if you don’t want a third-party risk.